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PEER COMPANIES

I hold 50 Shares of Cochin Shipyard at Rs 566 and 100 Shares of Tata Motors DVR at Rs 160. Should I hold or sell them?—PAWAN PRAJAPATI

Add more quantity of Cochin Shipyard shares to reduce your average cost. Excellent Q2FY2019 results, huge cash on books, solid growth in profit from the repair segment and substantial orders on hand make this as one of the most attractive value stocks. You may hold Tata Motors DVR for 15% to 20% upside, considering the steep fall in the stock price in the short term and also substantial discount to normal share.

I am holding 2,500 shares of Nocil at Rs 209 since May 2018. I have not seen any significant rise in this stock since then. Could you please advise? —DEEPAK KUMAR

You may hold NOCIL at least for another year as its rubber chemical business is expected to do well in the medium term because it is expanding capacity significantly. NOCIL also got good balance sheet and trades at quite an attractive valuation of around 12 PE on FY2020 expected earnings.

I hold more than 6,000 shares of Karur Vysya Bank. Now its value has come down significantly. Should I hold it for some more time? —ARS NARAYAN

Historically, Karur Vysya Bank used to maintain best performance among top two within old private sector banks, but now it has slipped below Karnataka Bank and South Indian Bank in terms of net NPA and business growth. Still, you may hold it for the long term considering the quality of management and quite low valuation of around 1.5 times adjusted book value compared to its own historical average.

Vardhman Holding trades at an enterprise value, which is about 60% discount to value of investments in Vardhman Textiles and other investments. So hold it with a target price of around Rs 3,500/. After divesting consumer durable business, the existing businesses of Leel Electrical seem to be giving tremendous pressures on both profitability and also on working capital management. Leel Electrical made a loss of Rs 19 crore before exceptional item in the latest quarter, inventories & receivables form 89% of annualized sales and surprisingly, despite unlocking huge cash from divestment, it is still sitting on a debt of Rs 487 crore as on September 30, 2018. Hence, exit the stock. Large IT stocks like Infosys may not give significant return in the short term due to oil price crash which is likely to lead to further appreciation of rupee exchange rate. However, after nearly 18% fall from its 52-week high, the stock has become quite attractive in terms of valuation (15 PE on FY2020E EPS). Therefore, you may hold the stock at least till you get your cost price.

Apollo Hospital is fairly valued at over 35 PE on FY2020 expected earnings considering lack of any growth in its profits over the last 5 years and poor single digit return on capital employed. Sell if it moves close to Rs 1,300. Three-times adjusted book value expected in FY2020 is a fair value for RBL Bank. Sell if you recover near your cost. In terms of price to adjusted book value and credit growth, Union Bank’s performance is quite poor. Still you may hold it for around 20% tactical profit considering the moderation in its bad assets in the latest quarter and also the RBI’s recent moves, which are significantly positive for the PSU bank.

After recent correction, Eicher trades at a decent valuation of around 24 times FY2020 expected earnings. Hence, hold it with a target price of around Rs 26,400. Sell SRF around Rs 2,200/, which is a fair price for this stock with a PE of around 18 on FY2020 expected earnings. Hold YES Bank with a target price of around Rs 300 as at 2 times adjusted book value and over 50% yearon-year credit growth, the stock looks very attractive. In the last two-and-half years there is no significant year-onyear growth in the business for Force Motors and it seems to be facing severe competitive pressures. Therefore, sell the stock around Rs 2,000. Over 30% crash in oil price is highly positive development for the tyre industry – MRF a leader with strong balance sheet and drawing around 3/4th revenue from the replacement market is best positioned to gain. Hence, hold MRF with a target price of aroundRs 80,000 in the short term.

I have 2,000 shares of PTC India bought at Rs 40 and 100 bought at Rs 85. I can wait. Will they give me good returns? —SUYOG

Both trade at substantial discount to respective book value after recent steep fall in their stock prices and also give decent dividends. Hence, you may hold both of them.

I have 2,500 shares of Unichem Laboratory at Rs 380. Please advise what to do. —ABHISHEK GARG

Please hold it for 2 to 3 years to recover your cost, considering its strong balance sheet and investments it is making in new businesses.

I hold Nesco at Rs 500, Arvind at Rs 330 and Andhra Sugar at Rs 388. I am a long-term investor with 3 to 5 years view. Please suggest your views on these stocks. —SELVA

In my firm view, both NESCO and Andhra Sugar are the most attractive value stocks – NESCO with huge land bank and strong balance sheet with free cash close to Rs 500 crore and Andhra Sugar, predominantly a chemical company, are available at highly attractive valuation after the recent correction in their stock prices. Considering recent steep correction in the stock price and also possibility of some value unlocking from the proposed de-merger, you may hold Arvind with a target price of Rs 370.